Trade and Culture: Religion Dynamics

*Terver Audu, John Ogonna Okorie and Aminat Orekoya*

### **Abstract**

The study seeks to understand the implications of cultural indices like language and religion on international trade. Using data compiled on the three most religious states and the three least religious states in the world, we reviewed the trading activities of these countries alongside their trading partners to find out if they are culturally connected or not. The research controls for colonialism and geographical distance. This is to isolate the effects of common colonial heritage and geographical proximity of countries on the trade between such countries. The study concludes that trade of cultural goods in the most and least religious countries in the world is not significantly determined by cultural layers of religion and language but other factors such as reciprocity trading and economic factors.

**Keywords:** culture, cultural layers, trade, religious, language

### **1. Introduction**

Culture is the sum total of an individual's experience, knowledge, value, attitude, innovation and entrepreneurship, gained as a member of society. Culture comprises of many layers and a number of areas which include language, religion, material culture, art, education and relationships amongst others that make an individual a complex whole. The foregoing implies that culture is an important informal institution that can strongly impact the way people think, feel, make decisions, and act; influencing behavior of firms and individuals by providing guidelines regarding acceptable and unacceptable behaviors in a society. Culture is one of the most salient forces influencing human behavior, decisions and, correspondingly, economic performance of nations and companies competing therein.

The relationship between trade and culture has lead to the emanation of a long aged debate. National culture has a significant bearing on financial decision making and facilitates international trade [1, 2]. Opine that concerns have been expressed in many circles on possible detrimental effects of international trade on cultural goods due to the diversity in the trade of cultural goods which may lead to the loss of national culture and values especially in the audio-visual products.

This study seeks to understand how cultural layers such as religion and language affect international trade. The task is difficult due to the diversity and complexity of the trade and culture debate that has been on for decades. The remainder of the paper is organized as follows; the next section comprises the literature review on trade and

culture. Section 3 shows the methodology adopted for this study while Section 4 presents results and analysis. Finally, Section 5 completes the study with conclusion.

### **2. Literature review**

For years, the debate on the interaction between culture and trade has extensively gained the interest of researchers and policy makers in the academic economic literature. This debate has been ongoing since the Uruguay round-GATT and North American Free Trade Agreement (NAFTA), General Agreement on Tariffs and Trade (GATT) [3]. Many cultural layers such as ethnic background, religion, ideological orientation, and art amongst others [4], have become very important factors influencing the economic and trading activities of several economies.

Studies have shown the nexus between economies with similar ancestry and cultural layers [5]. Establish that, countries with fewer cultural differences will most likely have a close trade relationship. Similarly, [6] reveals that countries with weaker cultural links and ancestry relationships are less likely to trade with each other and if they do, they exchange fewer goods and smaller volumes [7]. However notes that cultural dissimilarities will tend to retard trade especially in the poorer countries and regions of the world.

The dual role of culture implies that culture is a double edged sword in its effect on trade and the economy. On the one hand, culture promotes and positively influences businesses, trade credit, international trade and economic growth. It is so important that it can bring about a fall in trade cost which facilitates the international exchange of goods and services [8, 9]. Finds that an increase in cultural export increases the economic growth of a country while an increase in cultural imports decreases the economic growth of a country. Culture has been shown to positively relate to trade credit provision. The study by [10] reveals that trade credit provision is higher in countries with higher collectivism, power distance, uncertainty avoidance and masculinity scores. Culture has a positive association between Confucianism and the usage of trade credit in china where it was found that firms with stronger Confucianism atmosphere can obtain more trade credit than their peers elsewhere [11].

On the other hand, culture may not always be trade promoting. For instance, Linguistic dissimilarity due to cultural differences may pose as a major barrier to international transactions as it results in breakage in communication and increase in trade cost [8] as well as a fall in trade volumes [7, 8]. Opines that learning a language has economies of scale and smaller countries will tend to spend more on learning and as such subsidizing the learning of another culture can be welfare enhancing in the long run. Furthermore, the large importation of cultural goods such as audio visuals may harm the national identity and cultural values of a country. Affirming to this finding is a study on U.S and Canada [12], shows that even though the US and Canada trade in cultural goods more than any other country in the world, Canadians consider their culture to be susceptible to US influence due to similarities with US in language and heritage and as such culture should be kept separate from international trading rules.

Using a standard gravity model in a study of 172 countries [13], while examining the impact of cultural differences on trade in the cold war period and the post cold war period concludes that the negative influence of cultural differences on trade is more prominent in the post cold war period than in the cold war period and as such culture dissimilarity is a huge barrier to trade. Other studies such as [14] using gravity model investigates whether the relationship between intentional trade and cultural difference is nonlinear and find that the trade-culture relationship is one that is non-linear in

### *Trade and Culture: Religion Dynamics DOI: http://dx.doi.org/10.5772/intechopen.108371*

nature. This shows that trade decreases with cultural distance once cultural distance has surpassed a certain threshold. Some scholars focus on the optimal policy in settling the trade and culture debate. The debate over how to reconcile cultural policy with trade liberalization is one that has also been long-standing [3]. There is great difference in how countries have navigated this debate [15]. Aims at understanding how cultural policies intersect with trade policies in Latin America revealing that Latin America countries traditionally prefer to resort to multilateral and regional organizations for advancing cultural policies and programs for cultural industry promotion and exchange. He adds that, culture has received united support within the different integrated schemes embraced by Latin American countries and has therefore advanced smoothly in international and regional organizations. The trade-culture debate rages on with no clear-cut conclusion yet and this study is an addition to the trade and culture debate and literature.

### **3. Methodology and data**

The study employs the observation technique of secondary data obtained from valid sources and presented in tabular form. The tabulated data are for the top three most religious countries [16] and the top three least religious/most secular countries [17] in the world. Data were sourced on the following variables: top five import partners and top five export partners of the most and least religious countries in the world [18], official languages of all countries, official religions of all countries [19], colonialists of all countries [20], distances between countries and trading partners [21], and nearby countries to selected countries [22]. This research employed the simple technique of observing the tabulated data, their patterns and interactions, and drawing analysis and consequent inference from them. This study adopts a qualitative approach.

### **4. Presentation and analysis**


### **4.1 Religious distribution of countries**

### **4.2 The three most religious countries in the world**

The top five import partners of Israel are China, the USA, Germany, Turkey, and Switzerland according to **Table 1** above. Israel is a Hebrew speaking Judaist country, colonized by the British, and maintains geographical proximity to Palestine, Jordan, Lebanon, Cyprus and Syria. Israel maintains neither language similarity nor religious similarity with its import partners. None of the Israeli importing partners maintain geographical proximity to the Israeli state. Only the USA maintains a common colonial heritage with Israel as both countries were colonized by the British. In essence, Language, Religion, colonial heritage, and geographical proximity were not determinant factors in the Israeli choice of import partners.


### **Table 1.**

*Language and religious dimensions of the Israeli trade.*

The top export partners of Israel are the USA, China, Palestine, Netherlands and Germany. Israel maintains neither language similarity nor religious similarity with its export partners. Israel maintains common colonial heritage with the USA and Palestine as both countries are former British colonies. Israel maintains geographical proximity to Palestine alone. There are no evidences that language, religion, colonial heritage or geographical proximity determine the Israeli export destinations. Therefore, even though Israel is perceived as the most religious country in the world, Culture does not affect its trade with the rest of the world.

**Table 2** shows Saudi Arabia as the second most religious country in the world by perception, with Islam as its official religion, Arabic as its official language, and the following as its import partners; China, UAE, USA, Germany, and India. Saudi Arabia was colonized by the former Ottoman Empire, now Turkey, and is geographically in proximity to Bahrain, Qatar, Kuwait, UAE and Yemen. Saudi Arabia maintains


### **Table 2.**

*Language and religious dimensions of the Saudi Arabian trade.*

language and religious similarities with only the UAE out of all its top five import partners. The country shares no colonial heritage with any of its import partners. It only shares geographical proximity to the UAE. Hence, none of language, religion, colonial heritage, and geographical proximity acts as determinants of the Saudi Arabian top five import partners.

The Saudi Arabian export partners are China, India, Japan, South Korea, and the UAE. Of all five export partners, Saudi Arabia maintains language similarity, religious similarity, and geographical proximity to only the UAE. However, Saudi Arabia failed to maintain similar colonial heritage to any of its export partners. Hence, language, religion, colonial heritage, and geographical proximity do not determine Saudi Arabia's export destinations. Therefore, culture does not affect the Saudi Arabian trade with the rest of the world. The third most religious country in the world by perception is India as presented in **Table 3**.

India's official language is English, colonized by the British, a liberal secular state, that is geographically in proximity to Nepal, Bangladesh, Bhutan, Sri Lanka and


### **Table 3.**

*Language and religious dimensions of the Indian trade.*

Pakistan. India's top five import partners are China, USA, UAE, Saudi Arabia and Iraq. India maintains a similar language with only USA while maintaining a similar religion with China and the USA and; maintaining a common colonial heritage with the UAE, the USA, and Iraq. The country does not maintain geographical proximity to any of its import partners. Colonial heritage likely plays a role in the choice of the Indian import partners. However, the cultural indices of language and religion played no roles in the choice of the Indian import partners.

The Indian top five export partners are the USA, China, the UAE, Hong Kong and Germany. India has a language similarity with only the USA while maintaining religious similarity with the USA, China, Hong Kong, and Germany. India maintains similar colonial heritage with the USA and the UAE. The country maintains no geographical proximity to any of its export partners. Culture (Religion) likely determines the export destinations of India. Culture does not determine the import partners of India. Culture determines the export partners of India. Holistically, Culture does not determine the Indian trade with the rest of the world.

### **4.3 The Three least religious/most secular countries in the world**

The top five import partners of China are Japan, South Korea, USA, Germany, and Chinese Taipei according to **Table 4** above. China is a Liberal secular country with no official religion and Mandarin as its official language, never colonized by any other country, and maintains geographical proximity to Mongolia, Bhutan, Myanmar, Macao, and Hong Kong. China maintains language similarity with only Chinese Taipei while maintaining religious similarity with all its import partners as all are secular states that separate religion from the state. None of the Chinese import partners maintain geographical proximity to the Chinese state. None of the Chinese import partners maintain a common colonial heritage with China as the Chinese state was never colonized by any other state. In essence, Language, Religion, colonial heritage, and geographical proximity were not determinant factors in the Chinese choice of import partners.

The top export partners of China are the USA, Hong Kong, Japan, Germany and South Korea. China maintains language similarity with only Hong Kong of all its export partners. China also maintains religious similarity with all of its export


### **Table 4.**

*Language and religious dimensions of the Chinese trade.*

partners as all are secular states who are tolerant of religious associations. China does not maintain common colonial heritage with any of its export partners as the country was never colonized by another. China maintains geographical proximity to Hong Kong alone of all its export partners. There are no evidences that language, religion, colonial heritage or geographical proximity determines the Chinese export destinations. Therefore, even though China is perceived as the least religious country in the world, Culture does not affect its trade with the rest of the world.

The **Table 5** above shows Japan, the second least religious country in the world by perception. Japan is a secular state that is tolerant of religious association, has Japanese as its official language, and the following as its top five import partners; China, USA, Australia, South Korea, and Chinese Taipei. Japan was never colonized by any other country and is geographically in proximity to South Korea, North Korea, Chinese Taipei, Northern Mariana Island, and Hong Kong. Japan maintains language similarity with none of its import partners as none of them speak the Japanese language. Japan maintains religious similarity with all its import partners as they are all secular states who separate religion from the state. The country does not share a colonial heritage with any of its import partners as it was never colonized by any


### **Table 5.**

*Language and religious dimensions of the Japanese trade.*

### *Trade and Culture: Religion Dynamics DOI: http://dx.doi.org/10.5772/intechopen.108371*

other country. It only shares geographical proximity to South Korea and Chinese Taipei. Hence, none of language, religion, colonial heritage, and geographical proximity acts as determinant of the Japanese import partners.

The top five Japanese export partners are China, USA, South Korea, Chinese Taipei, and the Hong Kong. Of all five export partners, Japan maintains language similarity with none as none of the countries speak Japanese. Japan maintains religious similarity with all five top export partners as all are secular states who separate religion from the state. It maintains geographical proximity to South Korea, Chinese Taipei, and Hong Kong. However, Japan failed to maintain similar colonial heritage to any of its export partners. Hence, language, religion, and colonial heritage, do not determine the Japanese export destinations. Apparently, geographical proximity is a factor that influences trade in Japan. Therefore, culture does not affect the Japanese trade with the rest of the world (**Table 6**).

Sweden is the third least religious country in the world by perception. The country's official language is Swedish, was never colonized by anybody, and is a liberal secular state that is geographically in proximity to Estonia, Finland, Latvia,


### **Table 6.**

*Language and religious dimensions of the Swedish trade.*

Norway, and Lithuania. Sweden's top five import partners are Germany, Netherlands, Denmark, Norway, and China. Sweden maintains a similar language with none of its import partners. The country maintains a similarity in religion with all its import partners as all countries are liberal secular states. Sweden fails to maintain a common colonial heritage with any of its import partners as the country was never colonized. The country maintains geographical proximity to only Norway of its top five import partners. Language, Religion, Colonial heritage and Geographical proximity do not play any roles in the choice of the Swedish import partners. Hence, culture played no roles in the choice of the Swedish import partners.

The Swedish top five export partners are Germany, Norway, USA, Denmark, and Finland. Sweden has no language similarity with any of its export partners. The country maintains religious similarity with all its export partners as secular states who separate religion from the state. Sweden does not maintain similar colonial heritage with any of its top export partners as the country was never colonized. The country maintains geographical proximity to Norway and Finland of its top export partners. Culture does not determine the export destinations of Sweden. Culture does not determine the Swedish trade with the rest of the world.

### **5. Conclusion**

Trade in the least and the most cultural countries in the word are basically not determined by the pronounced culture in Language and Religion. It is basically determined by other factors aside pronounced culture. In the countries discussed above, they all traded more with countries they were neither religiously nor linguistically tied to. We observe the existence of reciprocity trading where countries tend to import highly from countries they export to. A major trend we also notice is that countries trade for economic reasons. Every country we discussed traded with the two biggest economic powers—China and the USA. This type of trade helps these countries establish stronger economic ties with the USA and China. A strong economic tie with the both countries results in economic gains in aids and Foreign Direct Investments (FDIs).

### **Conflict of interest**

The authors declare that there is no conflict of interest for this article.

*Trade and Culture: Religion Dynamics DOI: http://dx.doi.org/10.5772/intechopen.108371*

### **Author details**

Terver Audu\*, John Ogonna Okorie and Aminat Orekoya University of Ibadan, Ibadan, Nigeria

\*Address all correspondence to: terveraudu@gmail.com

© 2022 The Author(s). Licensee IntechOpen. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

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### **Chapter 3**
